For West Bank, an economy under siege is a Gaza ‘war dividend’

All is not well at Ramallah’s first and only bagel restaurant.

The normally bustling lunch crowd of students and government workers at the New York Cafe is a mere two tables of customers lingering over coffee on an April Tuesday. Instead of catering to a dinner rush, the owners are fortunate to get a single order past 2 p.m.

Inflation and longer truck routes forced by Israeli checkpoints and road closures are driving up the cost of ingredients from tomatoes to imported New York bagels by 30%.

Multiple days a week, employees phone in to say they are unable to show up for work owing to Israeli checkpoints blocking off their home villages from Ramallah.

Like households and businesses across the West Bank, the New York Cafe is struggling.

“The economy here is a chain reaction,” says owner and manager Sami Amin. “When one link falls, the whole chain implodes.”

Since Oct. 7 and the start of the Israel-Hamas war, many links in the occupied territory’s precarious economy have broken: workers barred from jobs in Israel, Palestinian Authority (PA) funds blocked, public sector salaries slashed. Unemployment is above 40%, economists estimate.

“The stress everyone is carrying”

For Mr. Amin, who opened the cafe and restaurant in 2016, inspired by 20 years of serving up bagels in New York, it is an economic downturn that has left no person untouched.

“It is not just about the money,” says Mr. Amin. “It is the stress everyone is carrying. People don’t have 20 shekels [$5.30] in their pocket.”

“The economy is at a standstill,” says Mohammed, a PA employee sitting in an empty cafe he runs in downtown Ramallah. “No one accepts a check anymore. No one will start a project. No one is willing to part with cash because you don’t know where the next dollar will come from, or when the next emergency will hit you.”

In the West Bank, the economy is another battlefield, where Palestinians say they feel under siege and out of options.

Immediately in the wake of the Oct. 7 Hamas attack, Israel blocked 190,000 Palestinian workers from the West Bank; each had been earning a minimum of $2,000 per month that flowed into the West Bank, supporting businesses from restaurants to car dealerships to construction.

Israel continues to withhold PA tax revenues it collects on its behalf, which the PA relies on for 65% of its income, over the alleged concern that funds would go to PA employees in Gaza.

The combination of blocked tax revenues, a drop in donor funding, and an economic downturn has led to an overall 80% decline in PA revenue, creating a $1.5 billion budget deficit over several months.

As a result, some 130,000 public sector workers in the West Bank have received only a fraction of their wages; the thousands of doctors, nurses, teachers, and police employed by the PA have received 60% of their monthly salaries. Many employees say their reduced wages are often delayed by two months or more.

The PA last paid a full monthly salary to its employees in November 2021.  

“It’s not worth it to be an Authority employee,” says Mohammed, who gave only his first name, sitting in his cafe and not at his PA job. “At a 60% starting salary, you can barely cover the gas for your car to get to work.”

Lost work in Israel

Amid the turbulence, Habib al-Khatib and his wife, Soraida, are clinging to the hope that Israel will allow Palestinian workers to return.

Mr. Khatib is a subcontractor who takes on interior design projects inside Israel, both solo and with an Israeli contractor. He says his last project in Sakhnin, in the Galilee, is still unfinished.

He and the five workers he employed, including his sons and brother-in-law, have been sitting at home since Oct. 7. He estimates his lost income over the past six months at $26,000.

His wife has worked in the PA’s Economy Ministry for 21 years, but has not received a full salary in three years. Although it has been a hardship, Mr. Khatib’s Israel work allowed them to manage.

“This was not an issue until my salary became our only source of income,” Ms. Khatib says. “The bank takes up more than half of it to cover our loans.”

The prospects of Mr. Khatib finding a job or projects are slim.

“There are no jobs in the West Bank,” Ms. Khatib says.

Najib Abu Amer, a former construction worker in Israel, and his wife, Alia, a government school teacher, are joining a new trend of reverse migration from Ramallah.

After years of attracting thousands of Palestinians from other towns and villages, as it emerged as the West Bank’s main economic and government hub, Ramallah, with its high rents and limited opportunities, is pushing people away.

The couple’s income has dropped by more than half since the Oct. 7 attack, when Mr. Abu Amer’s employer contacted him to inform him it was no longer safe to come to work.

“It was a tough decision, but we all thought it would be a matter of a week or two,” says Mr. Abu Amer.

The pair are planning to take their three children and move back to their home village of Qabalan, outside Nablus, some 40 kilometers (25 miles) from Ramallah.

It is not an easy decision.

“We are planning to move back to our village, but that would mean I might have to commute to Ramallah and back, which will cost more than half my current salary,” says Ms. Abu Amer.

“People can’t travel”

Of even more concern are long, unpredictable commutes “through checkpoints and uncertainty.” Main roads are subject to closure by the Israeli military, and bypass roads have witnessed deadly Israeli settler violence against Palestinians.

These very same dangers have led many universities to keep classes online.

Thousands of PA employees, meanwhile, are unable to make it to work, and the lack of movement of people has led to a lack of movement of trade and money within the West Bank.

“I haven’t stepped one foot outside Ramallah since Oct. 7,” says Mohammed, the cafe owner in downtown Ramallah. “People can’t travel, they can’t get to work, and they can’t shop – economically we are cut off from one another.”

At the New York Cafe, Mr. Amin estimates that 90% of his ingredients and products, as for all restaurants, are imported from and through Israel.

With restrictions and checkpoints, the minimum fee that truckers are now accepting is $535 to take goods from Israel into Ramallah – driving up costs for consumers. With no new customers at 3 p.m., Mr. Amin muses he may have to close up early.

“If you want to get rich, go somewhere else,” he says with a smile. “Here in Palestine your goal is just to survive another day.”